Jetblue Case Study

In: Business and Management

Submitted By FELICIA123
Words 1787
Pages 8
Introduction and industry analysis
JetBlue Airway Corporation is an American low-cost airline and it was one of a few U.S. airlines that were profitable during the sharp downturn in airline industry affected by the September 11, 2011 attacks. With its strong capital base, the company was successful due to its impressive management team, in which, David Neelaman has rich experience with airline start-ups; COO David Barger and CFO John Ower are all experienced former senior managers from other airlines. The company’s sales rose from $104,618 to $320,414 from December 2000 to December 2001 and net profit is negative $21,330 in December 2000 and reach positive $38,537 only one year later. As we can see, the company is a high growth company with huge potential.
To meet its further growth needs, it going to public to finance more money. The advantage of IPO is by raising more capital, the firm could use the capital to fund capital expenditure (buy more airplanes), pay off existing debt and also it increase public awareness and let potential customers know their products. Subsequently, this may increase its market share. And the venture capitalists may want to use IPO to cash in on JetBlue as they helped start-up. The disadvantages is that JetBlue has to disclosure more information for investors, prepare periodic financial reporting and they must also meet other rules and regulations that supervised by SEC. it is always costly of complying with regulatory requirements, such as preparing additional paper work, audit fees, investor relation management and oversight committees. More further, going public sometimes force companies to focus more on short-term results rather than long-term growth, and management team under pressure to boost earnings rather than adopt best practice.

In the U.S. airline industry, low-fare business model was gaining momentum. Its core strategy…...

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